[Federal Register Volume 60, Number 94 (Tuesday, May 16, 1995)]
[Notices]
[Pages 26057-26058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12001]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35689; File No. SR-Amex-95-16]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the American Stock Exchange, 
Inc., Relating to Minimum Fractions of Trading in Standard & Poor's 
MidCap 400 Depositary Receipts

May 8, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on May 3, 1995, the American 
Stock Exchange, Inc. (``Amex'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the self-regulatory organization. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Amex proposes to amend its Rule 127, Commentary .01 to provide 
that the minimum fractional change applicable to trading of Standard & 
Poor's MidCap 400 Depositary Receipts (``MidCap SPDRs'') shall be \1/
64\ of $1.00.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections (A), (B) and (C) below, 
of the most significant aspects of such statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Amex Rule 127 provides parameters for the minimum fractional change 
for dealings in securities on the Exchange. Commentary .01 to Rule 127 
provides that for securities listed under Amex Rule 1000 et seq., which 
relate to Portfolio Depositary Receipts (``PDRs''), the minimum 
fractional change shall be \1/32\ of $1.00. Since April 1994, Standard 
and Poor's Depositary Receipts (``SPDRs''), which have been trading on 
the Exchange since January 1993, have had a minimum fractional change 
of \1/64\ of $1.00.\2\

    \2\ Securities Exchange Act Release No. 33900 (April 12, 1994), 
59 FR 18585. SPDRs are PDRs based on the S&P 500 Composite Stock 
Price Index.
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    In initially approving trading of PDRs in \1/32\'s, the Commission 
stated that such trading would enhance market liquidity and should 
promote more accurate pricing, tighter quotations, and reduced price 
fluctuations. The Commission also noted that such trading should allow 
customers to receive the best possible execution of their transactions 
in these securities.\3\

    \3\ Securities Exchange Act Release No. 31794 (January 29, 
1993), 58 FR 7272.
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    The Commission has approved Exchange listing and trading of S&P 
MidCap 400 Depositary Receipts with a minimum fractional change of \1/
32\ of $1.00.\4\ The Exchange, however, [[Page 26058]] believes the 
benefits identified by the Commission in connection with trading PDRs 
in \1/32\'s will be further enhanced by trading MidCap SPDRs in \1/
64\'s.\5\ The Amex believes that trading MidCap SPDRs in \1/64\'s 
should further reduce price fluctuations based on the underlying index 
for the particular issuance (i.e., the S&P MidCap 400 Index). According 
to the Exchange, trading MidCap SPDRs in \1/64\'s should benefit retail 
customers, institutions, and other market participants that invest in 
or trade these PDRs. In addition, the expected result of a narrower 
quotation spread in MidCap SPDRs should make such securities more 
useful instruments for institutional arbitragers and other market 
professionals who may hedge their positions in futures or other 
derivative markets.\6\

    \4\ Securities Exchange Act Release No. 35534 (March 24, 1995), 
60 FR 16686.
    \5\ As the Commission noted in approving the trading of SPDRs in 
\1/64\'s, another market could seek to commence trading in PDRs; 
however, the Intermarket Trading System (``ITS'') does not currently 
accommodate quotes in \1/64\'s. See Securities Exchange Act Release 
No. 33900, supra note 2. The Exchange would discuss with the ITS 
Operating Committee or other ITS participants appropriate 
modifications to ITS to permit trading of PDRs in fraction of \1/
64\'s, should another market seek to initiate such trading. The 
Exchange notes, however, that other regulatory issues (e.g., the 
need for a market seeking to trade PDRs to adopt a rule comparable 
to Amex Rule 1000, Commentary .01) would also need to be addressed 
prior to the commencement of PDR trading in other markets.
    \6\ As noted above, ITS currently is not capable of 
accommodating quotes in \1/64\'s. See id. Consequently, if other 
securities exchanges or national securities associations desire to 
list and trade MidCap SPDRs, the Commission expects the Amex to 
discuss with ITS and other ITS participants the means by which ITS 
would be modified to accommodate such trading.
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    The Exchange will issue an ``Information Circular'' to members and 
member organizations relating to trading MidCap SPDRs in \1/64\'s prior 
to commencement of such trading.
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act in general, and Section 6(b)(5) in 
particular, in that it is designed to promote just and equitable 
principles of trade, to facilitate transactions in securities, and to 
protect investors and the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Amex believes that the proposed rule change will impose no 
burden on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants, or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change constitutes a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of Amex Rule 127, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and subparagraph 
(e) of Rule 19b-4 thereunder. At any time within 60 days of the filing 
of such proposed rule change, the Commission may summarily abrogate 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. Copies of such filing will also be available for 
inspection and copying at the principal office of the above-mentioned 
self-regulatory organization. All submissions should refer to File No. 
SR-Amex-95-16 and should be submitted by June 6, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\

    \7\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-12001 Filed 5-15-95; 8:45 am]
BILLING CODE 8010-01-M